Following balances appear in the books of X Ltd. as on 1st April, 2017:
₹
Machinery A/c
5,00,000
Provision for Depreciation A/c
2,25,000
The machinery is depreciated @ 10% p.a. on the Fixed Instalment Method. The accounting year being April-March. On 1st October, 2017, a machinery which was purchased on 1st July, 2014 for ₹ 1,00,000 was sold for ₹ 42,000 plus CGST and SGST @ 6% each and on the same date a new machine was purchased for ₹ 2,00,000 paying IGST @ 12%. Prepare Machinery Account and Provision for Depreciation Account for the year ended 31st March, 2018.
| ₹ | |
| Machinery A/c | 5,00,000 |
| Provision for Depreciation A/c | 2,25,000 |
The machinery is depreciated @ 10% p.a. on the Fixed Instalment Method. The accounting year being April-March. On 1st October, 2017, a machinery which was purchased on 1st July, 2014 for ₹ 1,00,000 was sold for ₹ 42,000 plus CGST and SGST @ 6% each and on the same date a new machine was purchased for ₹ 2,00,000 paying IGST @ 12%. Prepare Machinery Account and Provision for Depreciation Account for the year ended 31st March, 2018.
Machinery Account
Dr.
Cr.
Date
Particulars
J.F.
Amount
(Rs)
Date
Particulars
J.F.
Amount
(Rs)
2017
2017
April 01
Balance b/d (4,00,000 + 1,00,000)
5,00,000
Oct.01
Provision for Depreciation
32,500
Oct.01
Bank
2,00,000
Oct.01
Bank
42,000
Oct.01
Profit and Loss(WN1)
25,500
2018
Mar.31
Balance c/d
6,00,000
7,00,000
7,00,000
Provision for Depreciation Account
Dr.
Cr.
Date
Particulars
J.F.
Amount
(Rs)
Date
Particulars
J.F.
Amount
(Rs)
2017
2017
Oct.01
Machinery
32,500
April 01
Balance b/d
2,25,000
2018
2018
Mar.31
Balance c/d
2,47,500
Mar.31
Depreciation (WN2)
55,000
2,80,000
2,80,000
Working Notes:
1 Calculation of Loss on Sale of Machinery
Particulars
Amount
(Rs)
Original cost of Machine Sold
1,00,000
Less: Accumulated Depreciation on Machine Sold, from July 2014 to Oct 01, 2017 (1,00,000 × 10% × 3.25 years)
(32,500)
Book Value of Machine Sold
67,500
Less: Sale Value
(42,000)
Loss on Sale of Machine
25,500
2 Calculation of Depreciation Charged during the year
Particulars
Amount
(Rs)
On 4,00,000 @ 10% (4,00,000 × 10%)
40,000
On 2,00,000 @ 10% for 6 months (2,00,000 × 10% × 6/12)
10,000
On 1,00,000 @ 10% for 6 months (1,00,000 × 10% × 6/12)
5,000
Total
55,000
3. Journal entries for sale and purchase with GST
Journal
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
2017
Oct 1
Bank A/c
Dr.
47,040
To Machinery A/c
42,000
To Output CGST A/c
To Output SGST A/c
(Machinery purchased on 1st July, 2014 sold with CGST and SGST @ 6% each.)
2,520
2,520
Oct 1
Machinery A/c
Input IGST A/c
To Bank A/c
(Machinery purchased with IGST @ 12% paid.)
Dr.
Dr.
2,00,000
24,000
2,24,000
|
Machinery Account |
|||||||||
|
Dr. |
|
Cr. |
|||||||
|
Date |
Particulars |
J.F. |
Amount (Rs) |
Date |
Particulars |
J.F. |
Amount (Rs) |
||
|
2017 |
|
2017 |
|
||||||
|
April 01 |
Balance b/d (4,00,000 + 1,00,000) |
|
5,00,000 |
Oct.01 |
Provision for Depreciation |
|
32,500 |
||
|
Oct.01 |
Bank |
|
2,00,000 |
Oct.01 |
Bank |
|
42,000 |
||
|
|
|
|
|
Oct.01 |
Profit and Loss(WN1) |
|
25,500 |
||
| 2018 | |||||||||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
6,00,000 |
||
|
|
|
|
7,00,000 |
|
|
|
7,00,000 |
||
|
|
|
|
|
|
|
|
|
||
|
Provision for Depreciation Account |
|||||||||
|
Dr. |
|
Cr. |
|||||||
|
Date |
Particulars |
J.F. |
Amount (Rs) |
Date |
Particulars |
J.F. |
Amount (Rs) |
||
|
2017 |
|
2017 |
|
||||||
|
Oct.01 |
Machinery |
|
32,500 |
April 01 |
Balance b/d |
|
2,25,000 |
||
|
2018 |
|
|
|
2018 |
|
|
|
||
|
Mar.31 |
Balance c/d |
|
2,47,500 |
Mar.31 |
Depreciation (WN2) |
|
55,000 |
||
|
|
|
|
2,80,000 |
|
|
|
2,80,000 |
||
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|
|
|
|
|
|
|
||
Working Notes:
1 Calculation of Loss on Sale of Machinery
|
Particulars |
Amount (Rs) |
|
Original cost of Machine Sold |
1,00,000 |
|
Less: Accumulated Depreciation on Machine Sold, from July 2014 to Oct 01, 2017 (1,00,000 × 10% × 3.25 years) |
(32,500) |
|
Book Value of Machine Sold |
67,500 |
|
Less: Sale Value |
(42,000) |
|
Loss on Sale of Machine |
25,500 |
2 Calculation of Depreciation Charged during the year
|
Particulars |
Amount (Rs) |
|
On 4,00,000 @ 10% (4,00,000 × 10%) |
40,000 |
|
On 2,00,000 @ 10% for 6 months (2,00,000 × 10% × 6/12) |
10,000 |
|
On 1,00,000 @ 10% for 6 months (1,00,000 × 10% × 6/12) |
5,000 |
|
Total |
55,000 |
3. Journal entries for sale and purchase with GST
|
Journal
|
|||||
|
Date
|
Particulars
|
L.F.
|
Debit
Amount
(₹)
|
Credit
Amount
(₹)
|
|
|
|
|
|
|
||
|
2017
|
|
|
|
||
|
Oct 1
|
Bank A/c |
Dr.
|
47,040
|
|
|
|
|
To Machinery A/c |
|
|
42,000
|
|
|
|
To Output CGST A/c To Output SGST A/c (Machinery purchased on 1st July, 2014 sold with CGST and SGST @ 6% each.) |
|
|
2,520
2,520 |
|
|
Oct 1 |
Machinery A/c Input IGST A/c To Bank A/c (Machinery purchased with IGST @ 12% paid.) |
Dr. Dr. |
2,00,000 24,000 |
2,24,000 |
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